The Bank of Ghana has disclosed that the government will need to strengthen its commitment controls in addition to aggressively pursuing its revenue mobilization measures in order to meet its revised 2022 deficit targets.
The Central Bank made this observation after Ghana’s fiscal data for the first three quarters of the year showed that both revenues and expenditure outturns for the review period fell short of their respective targets.
“The deviations in revenue stem partly from lower-than expected receipts. The expenditures performance on the other hand could be attributed to the build-up of arrears, considering the low statutory transfers. Aggressive revenue mobilization and strengthened commitment controls in the ensuing months of 2022 will contribute immensely to achieving the revised end year budget deficit of 6.6 percent of GDP and primary surplus of 0.1 percent of GDP.”Bank of Ghana
The pace of revenue mobilization remained below target, reflecting in both tax and non-tax revenue. For the first nine months of 2022, total Revenue and Grants was GH¢65,398.8 million (11.1% of GDP), lower than the target of GH¢67,307.4 million (11.4% of GDP).
The revenue outturn represented 97.2 percent of the target and recorded a year-on-year growth of 38.5 percent. During the review period, domestic revenue totaled GH¢64,601.4 million, below the target of GH¢66,503.4 million.
Tax revenue, comprising taxes on income & property, taxes on domestic goods and services and international trade taxes, was GH¢49,055.3 million, lower than the target of GH¢50,414.8 million. This represented a negative deviation of 2.7 percent.
Non-Tax revenue for the review period totaled GH¢11,048.9 million, representing 90.8 percent of the target, and a year-on-year growth of 81.7 percent.
“The underperformance of this revenue handle was mainly due to lower collection efforts by some large and medium collectors as well as unrealized dividend payments.”Bank of Ghana
Other revenue measures made up of ESLA proceeds, raked in a total of GH¢4,217.3 million and was 19.3 percent above the target of GH¢3,535.3 million.
Government received project grants in the sum of GH¢797.4 million lower than the envisaged target of GH¢804.0 million by 0.8 percent. This outturn, according to BoG, was also lower than the GH¢847.4 million recorded in the corresponding period of 2021, thus reflecting a year-on-year decline of 6.0 percent.
Government spending and arrears clearance
The Bank of Ghana assessed that government spending and arrears clearance was broadly within target, however, some key expenditure lines recorded overruns.
Total expenditures and arrears clearance for the first nine months of 2022, summed up to GH¢99,570.1 million, below the target of GH¢102,566.8 million. This outturn represented a year-on-year growth of 30.1 percent and also accounted for 97.1 percent of the target.
Of the expenditures, Compensation of Employees (including wages and salaries, pensions & gratuities, and other wage related expenditure) was GH¢27,146.3 million, lower than the target of GH¢27,947.0 million.
This outturn represented 97.1 percent of the target. In terms of fiscal flexibility, compensation of employees constituted 42.0 percent of domestic revenue mobilized, better than the 50.4 percent recorded in the corresponding period of 2021.
Total interest payments of GH¢32,101.1 million was however, higher than the projected target of GH¢30,890.5 million by 3.9 percent and accounted for 32.2 percent of total expenditure.
It also constituted 49.7 percent of domestic revenue, compared with 54.7 percent recorded in the corresponding period of 2021. Data from the BoG showed that domestic interest payments accounted for 78.0 percent of the total interest payments during the period under review.
Government budgetary operations resulted in an overall budget deficit of GH¢44,021.8 million at the end of the first nine months of 2022. This, according to BoG, was higher than the target of GH¢36,684.4 million by 20.0 percent.